There have been several well-meaning attempts to better define just what the Phantom Stranger is, or how he BECAME what he is, but inevitably those attempts fall short of the aesthetic of the character. The single most central tenant of the Phantom Stranger is that he is unknowable. We are very deliberately never meant to understand him.

While you might accuse a character like this of being a walking skeleton key; deus ex machina personified, giving any writer and excuse to throw into any story if they need a loophole. If were used badly, that would be the case, but if you go back over his history he's often used for the exact opposite. Rather than serving as a literary get out of jail free card, he's generally used as an impetus for adventure. His arrival signals some sort of expansive, other-worldly adventure. Rather than being used as an excuse for poor writing, he's more often a part of some really GREAT writing; some of the coolest classic otherworldly stories happened because the Phantom Stranger appeared.

This is all made possible specifically because he's such a completely unexplained and fantastic part of the DC's world, so it was vital that we did the same thing; we made no attempt at all to define his origins. He simply is. That's what makes this character so cool.